UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2020 2021
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-03140
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Northern States Power Company | | |
(Exact name of registrant as specified in its charter) | | |
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Wisconsin | | | | 001-03140 | | 39-0508315 |
(State or other jurisdiction orof incorporation or organization) | | | | (Commission File Number) | | (IRSI.R.S Employer Identification No.) |
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1414 West Hamilton Avenue | Eau Claire | Wisconsin | | | | 54701 |
(Address of Principal Executive Offices)principal executive offices) | | | | | | (Zip Code) |
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715(715) | 839-2625737-2625 |
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code) | |
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N/A |
(Former Name, Former Addressname, former address and Former Fiscal Year,former fiscal year, if Changed Since Last Report)changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading SymbolSymbol(s) | | Name of each exchange on which registered |
N/A | | N/A | | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☐ | | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | | Smaller reporting company | ☐ | |
| | | Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class | | Outstanding at July 31, 202029, 2021 |
Common Stock, $100 par value | | 933,000 shares |
Northern States Power Company meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to such Form 10-Q.
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PART I | FINANCIAL INFORMATION | | |
Item 1 — | | | |
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Item 2 — | | | |
Item 4 — | | | |
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PART II | OTHER INFORMATION | | |
Item 1 — | | | |
Item 1A — | | | |
Item 6 — | | | |
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| Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | |
| Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | |
This Form 10-Q is filed by NSP-Wisconsin.Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin). NSP-Wisconsin is a wholly owned subsidiary of Xcel Energy Inc. Additional information on Xcel Energy is available on various filings with the SEC.Securities and Exchange Commission. This report should be read in its entirety.
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Definitions of Abbreviations | | | | |
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Xcel Energy Inc.’s Subsidiaries and Affiliates (current and former) | |
e prime | e prime inc. |
NSP-Minnesota | Northern States Power Company, a Minnesota corporation |
NSP-Wisconsin | Northern States Power Company, a Wisconsin corporation |
PSCo | Public Service Company of Colorado |
SPS | Southwestern Public Service Company |
Utility subsidiaries | NSP-Minnesota, NSP-Wisconsin, PSCo and SPS |
Xcel Energy | Xcel Energy Inc. and its subsidiaries |
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Federal and State Regulatory Agencies |
D.C. Circuit | United States Court of Appeals for the District of Columbia Circuit |
EPA | United States Environmental Protection Agency |
FERC | Federal Energy Regulatory Commission |
IRS | Internal Revenue Service |
PSCW | Public Service Commission of Wisconsin |
SEC | Securities and Exchange Commission |
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Other | |
ADIT | Accumulated deferred income tax |
ASC | FASB Accounting Standards Codification |
C&I | Commercial and Industrial |
CEO | Chief executive officer |
CFO | Chief financial officer |
COVID-19 | Novel coronavirus |
ETR | Effective tax rate |
FASB | Financial Accounting Standards Board |
GAAP | GenerallyUnited States generally accepted accounting principles |
MDL | Multi-district litigation |
MGP | Manufactured gas plant |
MISO | Midcontinent Independent System Operator, Inc. |
NOL | Net operating loss |
O&M | Operating and maintenance |
PFAS | Per- and PolyFluoroAlkyl Substances |
ROE | Return on equity |
RTO | Regional Transmission Organization |
TOs | Transmission owners |
UMP | Utility Money Pool |
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Forward-Looking Statements |
Except for the historical statements contained in this report, the matters discussed herein are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements, including those relating to future sales, future expenses, future operating performance, estimated base capital expenditures and financing plans, projected capital additions and forecasted annual revenue requirements with respect to rider filings, expected rate increases to customers, expectations and intentions regarding regulatory proceedings, and expected impacts on our results of operations, financial condition and cash flows or resettlement calculations and credit losses relating to certain energy transactions, as well as assumptions and other statements are intended to be identified in this document by the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will,” “would” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. The following factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and in other securities filings with the SEC (including NSP-Wisconsin's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019,2020, and subsequent securities filings), could cause actual results to differ materially from management expectations as suggested by such forward-looking information: uncertainty around the impacts and duration of the COVID-19 pandemic; operational safety, including nuclear generation;safety; successful long-term operational planning; commodity risks associated with energy markets and production; rising energy prices and fuel costs; qualified employee work force and third-party contractor factors; ability to recover costs,costs; changes in regulation; reductions in our credit ratings and the cost of maintaining certain contractual relationships; general economic conditions, including inflation rates, monetary fluctuations and their impact on capital expenditures and the ability of NSP-Wisconsin and its subsidiaries to obtain financing on favorable terms; availability or cost of capital; our customers’ and counterparties’ ability to pay their debts to us; assumptions and costs relating to funding our employee benefit plans and health care benefits; tax laws; effects of geopolitical events, including war and acts of terrorism; cyber security threats and data security breaches; seasonal weather patterns; changes in environmental laws and regulations; climate change and other weather; natural disaster and resource depletion, including compliance with any accompanying legislative and regulatory changes; and costs of potential regulatory penalties.
PART I — FINANCIAL INFORMATION
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ITEM 1 — FINANCIAL STATEMENTS | | | | |
NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(amounts in millions)
| | | Three Months Ended June 30 | | | Six Months Ended June 30 | | | Three Months Ended June 30 | | Six Months Ended June 30 |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | | 2021 | | 2020 |
Operating revenues | Operating revenues | | | | | | | | Operating revenues | | | | | | | |
Electric, non-affiliates | Electric, non-affiliates | $ | 157.8 | | | $ | 164.4 | | | $ | 328.7 | | | $ | 335.3 | | Electric, non-affiliates | $ | 178 | | | $ | 158 | | | $ | 356 | | | $ | 329 | |
Electric, affiliates | Electric, affiliates | 41.5 | | | 43.5 | | | 82.4 | | | 87.6 | | Electric, affiliates | 46 | | | 41 | | | 92 | | | 82 | |
Natural gas | Natural gas | 19.0 | | | 20.9 | | | 64.2 | | | 82.0 | | Natural gas | 31 | | | 19 | | | 88 | | | 64 | |
Other | 0.2 | | | 0.1 | | | 0.2 | | | 0.2 | | |
| Total operating revenues | Total operating revenues | 218.5 | | | 228.9 | | | 475.5 | | | 505.1 | | Total operating revenues | 255 | | | 218 | | | 536 | | | 475 | |
| Operating expenses | Operating expenses | | | | | Operating expenses | | | |
Electric fuel and purchased power, non-affiliates | Electric fuel and purchased power, non-affiliates | 3.4 | | | 3.1 | | | 6.3 | | | 5.0 | | Electric fuel and purchased power, non-affiliates | 5 | | | 3 | | | 10 | | | 6 | |
Purchased power, affiliates | Purchased power, affiliates | 91.3 | | | 99.9 | | | 185.6 | | | 203.4 | | Purchased power, affiliates | 106 | | | 91 | | | 206 | | | 186 | |
Cost of natural gas sold and transported | Cost of natural gas sold and transported | 6.6 | | | 8.2 | | | 28.0 | | | 40.5 | | Cost of natural gas sold and transported | 20 | | | 7 | | | 51 | | | 28 | |
Operating and maintenance expenses | Operating and maintenance expenses | 44.9 | | | 51.3 | | | 93.5 | | | 103.2 | | Operating and maintenance expenses | 50 | | | 45 | | | 99 | | | 94 | |
Conservation program expenses | Conservation program expenses | 3.2 | | | 3.1 | | | 6.3 | | | 6.0 | | Conservation program expenses | 3 | | | 3 | | | 6 | | | 6 | |
Depreciation and amortization | Depreciation and amortization | 38.8 | | | 34.4 | | | 77.4 | | | 68.5 | | Depreciation and amortization | 36 | | | 39 | | | 73 | | | 77 | |
Taxes (other than income taxes) | Taxes (other than income taxes) | 7.1 | | | 7.1 | | | 14.1 | | | 14.7 | | Taxes (other than income taxes) | 8 | | | 7 | | | 15 | | | 14 | |
Total operating expenses | Total operating expenses | 195.3 | | | 207.1 | | | 411.2 | | | 441.3 | | Total operating expenses | 228 | | | 195 | | | 460 | | | 411 | |
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Operating income | Operating income | 23.2 | | | 21.8 | | | 64.3 | | | 63.8 | | Operating income | 27 | | | 23 | | | 76 | | | 64 | |
| Other expense, net | Other expense, net | (1.8) | | | (0.3) | | | (4.3) | | | (0.6) | | Other expense, net | 0 | | | (2) | | | 0 | | | (4) | |
Allowance for funds used during construction — equity | Allowance for funds used during construction — equity | 1.4 | | | 0.9 | | | 2.5 | | | 1.4 | | Allowance for funds used during construction — equity | 1 | | | 1 | | | 2 | | | 3 | |
| Interest charges and financing costs | Interest charges and financing costs | | | | | Interest charges and financing costs | |
Interest charges — includes other financing costs of $0.4, $0.3, $0.7 and $0.7, respectively | 9.9 | | | 9.8 | | | 19.8 | | | 19.8 | | |
Interest charges | | Interest charges | 12 | | | 10 | | | 21 | | | 20 | |
Allowance for funds used during construction — debt | Allowance for funds used during construction — debt | (0.5) | | | (0.3) | | | (1.0) | | | (0.6) | | Allowance for funds used during construction — debt | (1) | | | (1) | | | (1) | | | (1) | |
Total interest charges and financing costs | Total interest charges and financing costs | 9.4 | | | 9.5 | | | 18.8 | | | 19.2 | | Total interest charges and financing costs | 11 | | | 9 | | | 20 | | | 19 | |
| Income before income taxes | Income before income taxes | 13.4 | | | 12.9 | | | 43.7 | | | 45.4 | | Income before income taxes | 17 | | | 13 | | | 58 | | | 44 | |
Income tax expense (benefit) | Income tax expense (benefit) | 1.3 | | | 4.3 | | | (2.0) | | | 12.8 | | Income tax expense (benefit) | 3 | | | 1 | | | 12 | | | (2) | |
Net income | Net income | $ | 12.1 | | | $ | 8.6 | | | $ | 45.7 | | | $ | 32.6 | | Net income | $ | 14 | | | $ | 12 | | | $ | 46 | | | $ | 46 | |
See Notes to Consolidated Financial Statements
NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in millions)
| | | Six Months Ended June 30 | | | Six Months Ended June 30 |
| | 2020 | | 2019 | | 2021 | | 2020 |
Operating activities | Operating activities | | | | Operating activities | | | |
Net income | Net income | $ | 45.7 | | | $ | 32.6 | | Net income | $ | 46 | | | $ | 46 | |
Adjustments to reconcile net income to cash provided by operating activities: | Adjustments to reconcile net income to cash provided by operating activities: | | Adjustments to reconcile net income to cash provided by operating activities: | |
Depreciation and amortization | Depreciation and amortization | 78.0 | | | 68.9 | | Depreciation and amortization | 73 | | | 78 | |
Deferred income taxes | Deferred income taxes | (15.2) | | | 2.0 | | Deferred income taxes | 10 | | | (15) | |
| Allowance for equity funds used during construction | Allowance for equity funds used during construction | (2.5) | | | (1.4) | | Allowance for equity funds used during construction | (2) | | | (3) | |
Provision for bad debts | Provision for bad debts | 2.8 | | 3.5 | Provision for bad debts | 2 | | | 3 | |
Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | | Changes in operating assets and liabilities: | |
Accounts receivable | Accounts receivable | (4.2) | | | 6.8 | | Accounts receivable | 10 | | | (4) | |
Accrued unbilled revenues | Accrued unbilled revenues | 10.4 | | | 11.5 | | Accrued unbilled revenues | 5 | | | 10 | |
Inventories | Inventories | 0.2 | | | 0.7 | | Inventories | (1) | | | 0 | |
Other current assets | Other current assets | (0.3) | | | (0.4) | | Other current assets | (6) | | | 0 | |
Accounts payable | Accounts payable | (3.0) | | | (8.9) | | Accounts payable | 9 | | | (3) | |
Net regulatory assets and liabilities | Net regulatory assets and liabilities | 5.3 | | | 2.5 | | Net regulatory assets and liabilities | (47) | | | 5 | |
Other current liabilities | Other current liabilities | (1.9) | | | 3.6 | | Other current liabilities | (2) | | | (2) | |
Pension and other employee benefit obligations | Pension and other employee benefit obligations | (6.9) | | | (7.1) | | Pension and other employee benefit obligations | (5) | | | (7) | |
Other, net | Other, net | 0.2 | | | 1.0 | | Other, net | 2 | | | 0 | |
Net cash provided by operating activities | Net cash provided by operating activities | 108.6 | | | 115.3 | | Net cash provided by operating activities | 94 | | | 108 | |
| Investing activities | Investing activities | | | | Investing activities | |
Utility capital/construction expenditures | (121.0) | | | (86.8) | | |
Capital/construction expenditures | | Capital/construction expenditures | (111) | | | (121) | |
| Net cash used in investing activities | Net cash used in investing activities | (121.0) | | | (86.8) | | Net cash used in investing activities | (111) | | | (121) | |
| Financing activities | Financing activities | | | | Financing activities | |
| Repayments of short-term borrowings, net | Repayments of short-term borrowings, net | (65.0) | | | (1.0) | | Repayments of short-term borrowings, net | (19) | | | (65) | |
| Proceeds from (repayments of) long-term debt | 97.6 | | | (0.1) | | |
Borrowings under utility money pool arrangement | | Borrowings under utility money pool arrangement | 186 | | | 0 | |
Repayments under utility money pool arrangement | | Repayments under utility money pool arrangement | (153) | | | 0 | |
Proceeds from long-term debt | | Proceeds from long-term debt | 0 | | | 98 | |
Capital contributions from parent | Capital contributions from parent | 37.0 | | | 14.8 | | Capital contributions from parent | 40 | | | 37 | |
Dividends paid to parent | Dividends paid to parent | (31.6) | | | (41.7) | | Dividends paid to parent | (38) | | | (32) | |
Other, net | Other, net | (0.2) | | | — | | Other, net | 1 | | | 0 | |
Net cash provided by (used in) financing activities | 37.8 | | | (28.0) | | |
Net cash provided by financing activities | | Net cash provided by financing activities | 17 | | | 38 | |
| Net change in cash, cash equivalents and restricted cash | Net change in cash, cash equivalents and restricted cash | 25.4 | | | 0.5 | | Net change in cash, cash equivalents and restricted cash | 0 | | | 25 | |
Cash, cash equivalents and restricted cash at beginning of period | Cash, cash equivalents and restricted cash at beginning of period | 1.3 | | | 2.2 | | Cash, cash equivalents and restricted cash at beginning of period | 2 | | | 1 | |
Cash, cash equivalents and restricted cash at end of period | Cash, cash equivalents and restricted cash at end of period | $ | 26.7 | | | $ | 2.7 | | Cash, cash equivalents and restricted cash at end of period | $ | 2 | | | $ | 26 | |
| Supplemental disclosure of cash flow information: | Supplemental disclosure of cash flow information: | | | | Supplemental disclosure of cash flow information: | |
Cash paid for interest (net of amounts capitalized) | Cash paid for interest (net of amounts capitalized) | $ | (17.9) | | | $ | (18.2) | | Cash paid for interest (net of amounts capitalized) | $ | (19) | | | $ | (18) | |
Cash paid for income taxes, net | Cash paid for income taxes, net | (13.1) | | | (3.9) | | Cash paid for income taxes, net | (13) | | | (13) | |
Supplemental disclosure of non-cash investing transactions: | | | | |
| Supplemental disclosure of non-cash investing and financing transactions: | | Supplemental disclosure of non-cash investing and financing transactions: | |
Accrued property, plant and equipment additions | Accrued property, plant and equipment additions | $ | 18.5 | | | $ | 11.5 | | Accrued property, plant and equipment additions | $ | 19 | | | $ | 18 | |
Inventory transfers to property, plant and equipment | Inventory transfers to property, plant and equipment | 2.3 | | | 2.4 | | Inventory transfers to property, plant and equipment | 2 | | | 2 | |
Allowance for equity funds used during construction | Allowance for equity funds used during construction | 2.5 | | | 1.4 | | Allowance for equity funds used during construction | 2 | | 3 |
See Notes to Consolidated Financial Statements
NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(amounts in millions, except share and per share data)
| | | June 30, 2020 | | Dec. 31, 2019 | | June 30, 2021 | | Dec. 31, 2020 | |
Assets | Assets | | | | Assets | | | | |
Current assets | Current assets | | | | Current assets | | | | |
Cash and cash equivalents | Cash and cash equivalents | $ | 26.7 | | | $ | 1.3 | | Cash and cash equivalents | $ | 2 | | | $ | 2 | | |
Accounts receivable, net | Accounts receivable, net | 63.4 | | | 59.2 | | Accounts receivable, net | 61 | | | 70 | | |
Accrued unbilled revenues | Accrued unbilled revenues | 42.5 | | | 53.1 | | Accrued unbilled revenues | 48 | | | 53 | | |
| Other Receivables | | Other Receivables | 2 | | | 1 | | |
Inventories | Inventories | 13.4 | | | 16.0 | | Inventories | 15 | | | 15 | | |
Regulatory assets | Regulatory assets | 45.9 | | | 71.9 | | Regulatory assets | 47 | | | 19 | | |
Prepaid taxes | Prepaid taxes | 23.2 | | | 23.0 | | Prepaid taxes | 30 | | | 24 | | |
Prepayments and other | Prepayments and other | 4.9 | | | 4.6 | | Prepayments and other | 5 | | | 7 | | |
Total current assets | Total current assets | 220.0 | | | 229.1 | | Total current assets | 210 | | | 191 | | |
| Property, plant and equipment, net | Property, plant and equipment, net | 2,416.8 | | | 2,359.4 | | Property, plant and equipment, net | 2,541 | | | 2,484 | | |
| Other assets | Other assets | | | | Other assets | | |
Regulatory assets | Regulatory assets | 218.0 | | | 224.4 | | Regulatory assets | 216 | | | 215 | | |
| Other Investments | | Other Investments | 3 | | | 3 | | |
Other | Other | 3.5 | | | 3.1 | | Other | 2 | | | 1 | | |
Total other assets | Total other assets | 221.5 | | | 227.5 | | Total other assets | 221 | | | 219 | | |
Total assets | Total assets | $ | 2,858.3 | | | $ | 2,816.0 | | Total assets | $ | 2,972 | | | $ | 2,894 | | |
| Liabilities and Equity | Liabilities and Equity | | | | Liabilities and Equity | | |
Current liabilities | Current liabilities | | | | Current liabilities | | |
Current portion of long-term debt | | Current portion of long-term debt | $ | 19 | | | $ | 19 | | |
Short-term debt | Short-term debt | $ | — | | | $ | 65.0 | | Short-term debt | 0 | | | 19 | | |
| Borrowings under utility money pool arrangement | | Borrowings under utility money pool arrangement | 33 | | | 0 | | |
Accounts payable | Accounts payable | 37.1 | | | 53.6 | | Accounts payable | 47 | | | 41 | | |
Accounts payable to affiliates | Accounts payable to affiliates | 21.4 | | | 19.0 | | Accounts payable to affiliates | 29 | | | 15 | | |
Dividends payable to parent | Dividends payable to parent | 20.2 | | | 14.7 | | Dividends payable to parent | 15 | | | 19 | | |
Regulatory liabilities | Regulatory liabilities | 63.9 | | | 78.9 | | Regulatory liabilities | 7 | | | 31 | | |
Taxes accrued | Taxes accrued | 7.7 | | | 6.8 | | Taxes accrued | 8 | | | 12 | | |
Environmental liabilities | Environmental liabilities | 4.5 | | | 5.7 | | Environmental liabilities | 4 | | | 4 | | |
Accrued interest | Accrued interest | 9.5 | | | 9.3 | | Accrued interest | 10 | | | 10 | | |
Other | Other | 15.9 | | | 20.7 | | Other | 17 | | | 15 | | |
Total current liabilities | Total current liabilities | 180.2 | | | 273.7 | | Total current liabilities | 189 | | | 185 | | |
| Deferred credits and other liabilities | Deferred credits and other liabilities | | | | Deferred credits and other liabilities | | |
Deferred income taxes | Deferred income taxes | 302.9 | | | 298.1 | | Deferred income taxes | 321 | | | 307 | | |
Deferred investment tax credits | Deferred investment tax credits | 6.2 | | | 6.5 | | Deferred investment tax credits | 6 | | | 0 | | |
Regulatory liabilities | Regulatory liabilities | 360.6 | | | 370.8 | | Regulatory liabilities | 369 | | | 350 | | |
Environmental liabilities | Environmental liabilities | 17.0 | | | 17.8 | | Environmental liabilities | 15 | | | 16 | | |
Customer advances | Customer advances | 19.5 | | | 18.5 | | Customer advances | 21 | | | 20 | | |
Pension and employee benefit obligations | Pension and employee benefit obligations | 26.6 | | | 33.4 | | Pension and employee benefit obligations | 23 | | | 28 | | |
Other | Other | 23.8 | | | 22.6 | | Other | 27 | | | 33 | | |
Total deferred credits and other liabilities | Total deferred credits and other liabilities | 756.6 | | | 767.7 | | Total deferred credits and other liabilities | 782 | | | 754 | | |
| Commitments and contingencies | Commitments and contingencies | | Commitments and contingencies | 0 | | 0 | |
Capitalization | Capitalization | | | | Capitalization | | |
Long-term debt | Long-term debt | 906.0 | | | 808.0 | | Long-term debt | 888 | | | 887 | | |
Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at June 30, 2020 and Dec. 31, 2019, respectively | 93.3 | | | 93.3 | | |
Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at June 30, 2021 and Dec. 31, 2020, respectively | | Common stock — 1,000,000 shares authorized of $100 par value; 933,000 shares outstanding at June 30, 2021 and Dec. 31, 2020, respectively | 93 | | | 93 | | |
Additional paid in capital | Additional paid in capital | 577.7 | | | 537.3 | | Additional paid in capital | 638 | | | 605 | | |
Retained earnings | Retained earnings | 344.5 | | | 336.0 | | Retained earnings | 382 | | | 370 | | |
Total common stockholder’s equity | 1,015.5 | | | 966.6 | | |
Total common stockholder's equity | | Total common stockholder's equity | 1,113 | | | 1,068 | | |
Total liabilities and equity | Total liabilities and equity | $ | 2,858.3 | | | $ | 2,816.0 | | Total liabilities and equity | $ | 2,972 | | | $ | 2,894 | | |
See Notes to Consolidated Financial Statements
NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY (UNAUDITED)
(amounts in millions, except share data; shares in thousands)
| | | Common Stock Issued | | | Retained Earnings | | | Total Common Stockholder's Equity | | Common Stock Issued | | Retained Earnings | | Total Common Stockholder's Equity |
| | Shares | | Par Value | | Additional Paid In Capital | | | | | Total Common Stockholder's Equity | | Shares | | Par Value | | Additional Paid In Capital | | Retained Earnings | |
Three Months Ended June 30, 2020 and 2019 | | | | | | | | | | | |
Balance at March 31, 2019 | 933.0 | | | $ | 93.3 | | | $ | 510.1 | | | $ | 338.6 | | | | $ | 942.0 | | |
Net income | | 8.6 | | | | 8.6 | | |
Common dividends declared to parent | | | | (15.9) | | | | (15.9) | | |
Contribution of capital by parent | | 3.5 | | | | 3.5 | | |
Balance at June 30, 2019 | 933.0 | | | $ | 93.3 | | | $ | 513.6 | | | $ | 331.3 | | | | $ | 938.2 | | |
| Three Months Ended June 30, 2021 and 2020 | | Three Months Ended June 30, 2021 and 2020 | | | | | | | | | |
Balance at March 31, 2020 | Balance at March 31, 2020 | 933.0 | | | $ | 93.3 | | | $ | 547.3 | | | $ | 352.6 | | | | $ | 993.2 | | Balance at March 31, 2020 | 933 | | | $ | 93 | | | $ | 547 | | | $ | 353 | | | $ | 993 | |
Net income | Net income | | 12.1 | | | 12.1 | Net income | | 12 | | | 12 | |
Common dividends declared to parent | Common dividends declared to parent | | (20.2) | | | | (20.2) | | Common dividends declared to parent | | (20) | | | (20) | |
Contribution of capital by parent | Contribution of capital by parent | | 30.4 | | | | 30.4 | | Contribution of capital by parent | | 30 | | | 30 | |
| Balance at June 30, 2020 | Balance at June 30, 2020 | 933.0 | | | $ | 93.3 | | | $ | 577.7 | | | $ | 344.5 | | | | $ | 1,015.5 | | Balance at June 30, 2020 | 933 | | | $ | 93 | | | $ | 577 | | | $ | 345 | | | $ | 1,015 | |
| Balance at March 31, 2021 | | Balance at March 31, 2021 | 933 | | | $ | 93 | | | $ | 635 | | | $ | 382 | | | $ | 1,110 | |
Net income | | Net income | | 14 | | 14 |
Common dividends declared to parent | | Common dividends declared to parent | | (14) | | | (14) | |
Contribution of capital by parent | | Contribution of capital by parent | | 3 | | | 3 | |
Balance at June 30, 2021 | | Balance at June 30, 2021 | 933 | | | $ | 93 | | | $ | 638 | | | $ | 382 | | | $ | 1,113 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock Issued | | | | | | Retained Earnings | | | | Total Common Stockholder's Equity |
| Shares | | Par Value | | Additional Paid In Capital | | | | | | |
Six Months Ended June 30, 2020 and 2019 | | | | | | | | | | | |
Balance at Dec. 31, 2018 | 933.0 | | | $ | 93.3 | | | $ | 510.1 | | | $ | 339.0 | | | | | $ | 942.4 | |
Net income | | | | | | | 32.6 | | | | | 32.6 | |
Common dividends declared to parent | | | | | | | (40.3) | | | | | (40.3) | |
Contribution of capital by parent | | | | | 3.5 | | | | | | 3.5 | |
Balance at June 30, 2019 | 933.0 | | | $ | 93.3 | | | $ | 513.6 | | | $ | 331.3 | | | | | $ | 938.2 | |
| | | | | | | | | | | |
Balance at Dec. 31, 2019 | 933.0 | | | $ | 93.3 | | | $ | 537.3 | | | $ | 336.0 | | | | | $ | 966.6 | |
Net income | | | | | | | 45.7 | | | | | 45.7 | |
Common dividends declared to parent | | | | | | | (37.1) | | | | | (37.1) | |
Contribution of capital by parent | | | | | 40.4 | | | | | | 40.4 |
Adoption of ASC Topic 326 | | | | | | | (0.1) | | | | | (0.1) | |
Balance at June 30, 2020 | 933.0 | | | $ | 93.3 | | | $ | 577.7 | | | $ | 344.5 | | | | | $ | 1,015.5 | |
| | | | | | | | | | | |
See Notes to Consolidated Financial Statements | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock Issued | | Retained Earnings | | Total Common Stockholder's Equity |
| Shares | | Par Value | | Additional Paid In Capital | | |
Six Months Ended June 30, 2021 and 2020 | | | | | | | | | |
Balance at Dec. 31, 2019 | 933 | | | $ | 93 | | | $ | 537 | | | $ | 336 | | | $ | 966 | |
Net income | | | | | | | 46 | | | 46 | |
Common dividends declared to parent | | | | | | | (37) | | | (37) | |
Contribution of capital by parent | | | | | 40 | | | | | 40 | |
Balance at June 30, 2020 | 933 | | | $ | 93 | | | $ | 577 | | | $ | 345 | | | $ | 1,015 | |
| | | | | | | | | |
Balance at Dec. 31, 2020 | 933 | | | $ | 93 | | | $ | 605 | | | $ | 370 | | | $ | 1,068 | |
Net income | | | | | | | 46 | | 46 |
Common dividends declared to parent | | | | | | | (34) | | | (34) | |
Contribution of capital by parent | | | | | 33 | | | | | 33 | |
| | | | | | | | | |
Balance at June 30, 2021 | 933 | | | $ | 93 | | | $ | 638 | | | $ | 382 | | | $ | 1,113 | |
| | | | | | | | | |
See Notes to Consolidated Financial Statements |
NSP-WISCONSIN AND SUBSIDIARIES
Notes to Consolidated Financial Statements (UNAUDITED)
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly, in accordance with U.S. GAAP, the financial position of NSP-Wisconsin and its subsidiaries as of June 30, 20202021 and Dec. 31, 2019;2020; the results of its operations, including the components of net income, changes in stockholder's equity and comprehensive income for the three and six months ended June 30, 20202021 and 2019;2020; and its cash flows for the six months ended June 30, 20202021 and 2019. 2020.
All adjustments are of a normal, recurring nature, except as otherwise disclosed. Management has also evaluated the impact of events occurring after June 30, 20202021 up to the date of issuance of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. The Dec. 31, 20192020 balance sheet information has been derived from the audited 20192020 consolidated financial statements included in the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2019. These notes2020. Notes to the consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP on an annual basis have been condensed or omitted pursuant to such rules and regulations. For further information, refer to the consolidated financial statements and notes thereto included in the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020, filed with the SEC on Feb. 21, 2020.17, 2021. Due to the seasonality of NSP-Wisconsin’s electric and natural gas sales, interim results are not necessarily an appropriate base from which to project annual results. | | |
1. Summary of Significant Accounting Policies |
The significant accounting policies set forth in Note 1 to the consolidated financial statements in the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020 appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference. | | |
2. Accounting Pronouncements |
Recently Adopted
Credit Losses — In 2016, the FASB issued Financial Instruments - Credit Losses, Topic 326 (ASC Topic 326), which changes how entities account for losses on receivables and certain other assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards.
NSP-Wisconsin implemented the guidance using a modified-retrospective approach, recognizing aan immaterial cumulative effect charge of $0.1 million (after tax) to retained earnings on Jan 1. 2020. Other than first-time recognition of an allowance for doubtful accounts on accrued unbilled revenues, theThe Jan. 1, 2020 adoption of ASC Topic 326 did not have a significant impact on NSP-Wisconsin’s consolidated financial statements.
| | | | | | | | | | | | | | |
3. Selected Balance Sheet Data | | | | |
| (Millions of Dollars) | | June 30, 2020 | | Dec. 31, 2019 | |
(Millions of dollars) | | (Millions of dollars) | | June 30, 2021 | | Dec. 31, 2020 |
Accounts receivable, net | Accounts receivable, net | | | | | Accounts receivable, net | | | | |
Accounts receivable | Accounts receivable | | $ | 69.5 | | | $ | 64.7 | | Accounts receivable | | $ | 68 | | | $ | 78 | |
Less allowance for bad debts | Less allowance for bad debts | | (6.1) | | | (5.5) | | Less allowance for bad debts | | (7) | | | (8) | |
Accounts receivable, net | Accounts receivable, net | | $ | 63.4 | | | $ | 59.2 | | Accounts receivable, net | | $ | 61 | | | $ | 70 | |
| (Millions of Dollars) | | June 30, 2020 | | Dec. 31, 2019 | |
(Millions of dollars) | | (Millions of dollars) | | June 30, 2021 | | Dec. 31, 2020 |
Inventories | Inventories | | | | | Inventories | | | | |
Materials and supplies | Materials and supplies | | $ | 7.3 | | | $ | 6.8 | | Materials and supplies | | $ | 7 | | | $ | 7 | |
Fuel | Fuel | | 4.1 | | | 4.0 | | Fuel | | 5 | | | 4 | |
Natural gas | Natural gas | | 2.0 | | | 5.2 | | Natural gas | | 3 | | | 4 | |
Total inventories | Total inventories | | $ | 13.4 | | | $ | 16.0 | | Total inventories | | $ | 15 | | | $ | 15 | |
| | | | | | | | | | | | | | |
(Millions of Dollars) | | June 30, 2020 | | Dec. 31, 2019 |
Property, plant and equipment, net | | | | |
Electric plant | | $ | 3,070.6 | | | $ | 3,024.6 | |
Natural gas plant | | 375.2 | | | 365.5 | |
Common and other property | | 203.7 | | | 201.5 | |
Construction work in progress | | 120.4 | | | 82.8 | |
Total property, plant and equipment | | 3,769.9 | | | 3,674.4 | |
Less accumulated depreciation | | (1,353.1) | | | (1,315.0) | |
Property, plant and equipment, net | | $ | 2,416.8 | | | $ | 2,359.4 | |
| | | | | | | | | | | | | | |
(Millions of dollars) | | June 30, 2021 | | Dec. 31, 2020 |
Property, plant and equipment, net | | | | |
Electric plant | | $ | 3,253 | | | $ | 3,197 | |
Natural gas plant | | 402 | | | 391 | |
Common and other property | | 224 | | | 221 | |
Construction work in progress | | 99 | | | 71 | |
Total property, plant and equipment | | 3,978 | | | 3,880 | |
Less accumulated depreciation | | (1,437) | | | (1,396) | |
Property, plant and equipment, net | | $ | 2,541 | | | $ | 2,484 | |
| | |
4. Borrowings and Other Financing Instruments |
Short-Term Borrowings
NSP-Wisconsin meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility.facility and the money pool.
Money Pool — Xcel Energy Inc. and its utility subsidiaries have established a money pool arrangement that allows for short-term investments in and borrowings between the utility subsidiaries. Xcel Energy Inc. may make investments in the utility subsidiaries at market-based interest rates; however, the money pool arrangement does not allow the utility subsidiaries to make investments in Xcel Energy Inc.
Money pool borrowings for NSP-Wisconsin:
| | | | | | | | | | | | | | |
(Amounts in Millions, Except Interest Rates) | | Three Months Ended June 30, 2021 | | Year Ended Dec. 31, 2020 |
Borrowing limit | | $ | 150 | | | $ | 0 | |
Amount outstanding at period end | | 33 | | | 0 | |
Average amount outstanding | | 20 | | | 0 | |
Maximum amount outstanding | | 41 | | | 0 | |
Weighted average interest rate, computed on a daily basis | | 0.04 | % | | N/A |
Weighted average interest rate at period end | | 0.02 | | | N/A |
Commercial Paper — Commercial paper outstanding for NSP-Wisconsin was as follows:NSP-Wisconsin:
| (Amounts in Millions, Except Interest Rates) | (Amounts in Millions, Except Interest Rates) | | Three Months Ended June 30, 2020 | | Year Ended Dec. 31, 2019 | (Amounts in Millions, Except Interest Rates) | | Three Months Ended June 30, 2021 | | Year Ended Dec. 31, 2020 |
Borrowing limit | Borrowing limit | | $ | 150 | | | $ | 150 | | Borrowing limit | | $ | 150 | | | $ | 150 | |
Amount outstanding at period end | Amount outstanding at period end | | — | | | 65 | | Amount outstanding at period end | | 0 | | | 19 | |
Average amount outstanding | Average amount outstanding | | 41 | | | 51 | | Average amount outstanding | | 0 | | | 30 | |
Maximum amount outstanding | Maximum amount outstanding | | 91 | | | 93 | | Maximum amount outstanding | | 0 | | | 95 | |
Weighted average interest rate, computed on a daily basis | Weighted average interest rate, computed on a daily basis | | 1.04 | % | | 2.38 | % | Weighted average interest rate, computed on a daily basis | | N/A | | 1.59 | % |
Weighted average interest rate at period end | Weighted average interest rate at period end | | N/A | | 1.97 | | Weighted average interest rate at period end | | N/A | | 0.17 | |
Letters of Credit — NSP-Wisconsin uses letters of credit, generally with terms of one year, to provide financial guarantees for certain operating obligations. At both June 30, 20202021 and Dec. 31, 2019,2020, there were 0 letters of credit outstanding.outstanding under the credit facility.
Revolving Credit Facility — In order to useissue its commercial paper, program to fulfill short-term funding needs, NSP-Wisconsin must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under this credit facility. The line of credit facility provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.
NSP-Wisconsin has the right to request an extension of the revolving credit facility termination date for an additional one-year period. All extension requests are subject to majority bank group approval.
As of June 30, 2020,2021, NSP-Wisconsin had the following committed revolving credit facility available (in millions of dollars):
| Credit Facility (a) | Credit Facility (a) | | Outstanding (b) | | Available | Credit Facility (a) | | Outstanding (b) | | Available |
$ | 150 | | | $ | — | | | $ | 150 | | 150 | | | $ | 0 | | | $ | 150 | |
(a)This credit facility expiresExpires in June 2024.
(b)Includes outstanding commercial paper.
All credit facility bankbank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. NSP-Wisconsin had 0 direct advances on the credit facility outstanding at June 30, 20202021 and Dec. 31, 2019.2020.
Other Short-Term Borrowings — As of June 30, 20202021 and Dec. 31, 2019,2020, Clearwater Investments, Inc., a NSP-Wisconsin subsidiary, had 0 notes payable to Xcel Energy Inc.
Long-Term Borrowings
During the six months ended June 30, 2020, NSP-Wisconsin issued $100 million of 3.05% first mortgage bonds due May 1, 2051.
Revenue is classified by the type of goods/services rendered and market/customer type. NSP-Wisconsin’s operating revenues consistsconsisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2020 | | | | | | |
(Millions of Dollars) | | Electric | | Natural Gas | | All Other | | Total |
Major revenue types | | | | | | | | |
Revenue from contracts with customers: | | | | | | | | |
Residential | | $ | 59.6 | | | $ | 10.6 | | | $ | — | | | $ | 70.2 | |
C&I | | 93.2 | | | 6.8 | | | — | | | 100.0 | |
Other | | 2.0 | | | — | | | 0.2 | | | 2.2 | |
Total retail | | 154.8 | | | 17.4 | | | 0.2 | | | 172.4 | |
Interchange | | 41.5 | | | — | | | — | | | 41.5 | |
Other | | 0.1 | | | 1.1 | | | — | | | 1.2 | |
Total revenue from contracts with customers | | 196.4 | | | 18.5 | | | 0.2 | | | 215.1 | |
Alternative revenue and other | | 2.9 | | | 0.5 | | | — | | | 3.4 | |
Total revenues | | $ | 199.3 | | | $ | 19.0 | | | $ | 0.2 | | | $ | 218.5 | |
| | | Three Months Ended June 30, 2019 | | | Three Months Ended June 30, 2021 |
(Millions of Dollars) | (Millions of Dollars) | | Electric | | Natural Gas | | All Other | | Total | (Millions of Dollars) | | Electric | | Natural Gas | | | Total |
Major revenue types | Major revenue types | | | | | | | | | Major revenue types | | | | | | | |
Revenue from contracts with customers: | Revenue from contracts with customers: | | Revenue from contracts with customers: | | | |
Residential | Residential | | $ | 54.1 | | | $ | 10.8 | | | $ | — | | | $ | 64.9 | | Residential | | $ | 64 | | | $ | 15 | | | | $ | 79 | |
C&I | C&I | | 105.1 | | | 8.6 | | | — | | | 113.7 | | C&I | | 108 | | | 15 | | | | 123 | |
Other | Other | | 2.1 | | | — | | | 0.1 | | | 2.2 | | Other | | 2 | | | 0 | | | | 2 | |
Total retail | Total retail | | 161.3 | | | 19.4 | | | 0.1 | | | 180.8 | | Total retail | | 174 | | | 30 | | | | 204 | |
Interchange | Interchange | | 43.5 | | | — | | | — | | | 43.5 | | Interchange | | 46 | | | 0 | | | | 46 | |
Other | Other | | 0.1 | | | 0.9 | | | — | | | 1.0 | | Other | | 1 | | | 1 | | | | 2 | |
Total revenue from contracts with customers | Total revenue from contracts with customers | | 204.9 | | | 20.3 | | | 0.1 | | | 225.3 | | Total revenue from contracts with customers | | 221 | | | 31 | | | | 252 | |
Alternative revenue and other | Alternative revenue and other | | 3.0 | | | 0.6 | | | — | | | 3.6 | | Alternative revenue and other | | 3 | | | 0 | | | | 3 | |
Total revenues | Total revenues | | $ | 207.9 | | | $ | 20.9 | | | $ | 0.1 | | | $ | 228.9 | | Total revenues | | $ | 224 | | | $ | 31 | | | | $ | 255 | |
| | | Six Months Ended June 30, 2020 | | | Three Months Ended June 30, 2020 |
(Millions of Dollars) | (Millions of Dollars) | | Electric | | Natural Gas | | All Other | | Total | (Millions of Dollars) | | Electric | | Natural Gas | | | Total |
Major revenue types | Major revenue types | | | | | | | | | Major revenue types | | | | | | | |
Revenue from contracts with customers: | Revenue from contracts with customers: | | Revenue from contracts with customers: | | | |
Residential | Residential | | $ | 124.6 | | | $ | 35.1 | | | $ | — | | | $ | 159.7 | | Residential | | $ | 60 | | | $ | 10 | | | | $ | 70 | |
C&I | C&I | | 193.6 | | | 26.3 | | | — | | | 219.9 | | C&I | | 93 | | | 7 | | | | 100 | |
Other | Other | | 3.6 | | | — | | | 0.2 | | | 3.8 | | Other | | 2 | | | 0 | | | | 2 | |
Total retail | Total retail | | 321.8 | | | 61.4 | | | 0.2 | | | 383.4 | | Total retail | | 155 | | | 17 | | | | 172 | |
Interchange | Interchange | | 82.4 | | | — | | | — | | | 82.4 | | Interchange | | 41 | | | 0 | | | | 41 | |
Other | Other | | 0.6 | | | 1.9 | | | — | | | 2.5 | | Other | | 0 | | | 1 | | | | 1 | |
Total revenue from contracts with customers | Total revenue from contracts with customers | | 404.8 | | | 63.3 | | | 0.2 | | | 468.3 | | Total revenue from contracts with customers | | 196 | | | 18 | | | | 214 | |
Alternative revenue and other | Alternative revenue and other | | 6.3 | | | 0.9 | | | — | | | 7.2 | | Alternative revenue and other | | 3 | | | 1 | | | | 4 | |
Total revenues | Total revenues | | $ | 411.1 | | | $ | 64.2 | | | $ | 0.2 | | | $ | 475.5 | | Total revenues | | $ | 199 | | | $ | 19 | | | | $ | 218 | |
| | | Six Months Ended June 30, 2019 | | | Six Months Ended June 30, 2021 |
(Millions of Dollars) | (Millions of Dollars) | | Electric | | Natural Gas | | All Other | | Total | (Millions of Dollars) | | Electric | | Natural Gas | | | Total |
Major revenue types | Major revenue types | | | | | | | | | Major revenue types | | | | | | | |
Revenue from contracts with customers: | Revenue from contracts with customers: | | Revenue from contracts with customers: | | | |
Residential | Residential | | $ | 121.5 | | | $ | 44.4 | | | $ | — | | | $ | 165.9 | | Residential | | $ | 135 | | | $ | 46 | | | | $ | 181 | |
C&I | C&I | | 203.6 | | | 34.4 | | | — | | | 238.0 | | C&I | | 211 | | | 39 | | | | 250 | |
Other | Other | | 3.6 | | | — | | | 0.2 | | | 3.8 | | Other | | 3 | | | 0 | | | | 3 | |
Total retail | Total retail | | 328.7 | | | 78.8 | | | 0.2 | | | 407.7 | | Total retail | | 349 | | | 85 | | | | 434 | |
Interchange | Interchange | | 87.6 | | | — | | | — | | | 87.6 | | Interchange | | 92 | | | 0 | | | | 92 | |
Other | Other | | 0.6 | | | 2.0 | | | — | | | 2.6 | | Other | | 1 | | | 2 | | | | 3 | |
Total revenue from contracts with customers | Total revenue from contracts with customers | | 416.9 | | | 80.8 | | | 0.2 | | | 497.9 | | Total revenue from contracts with customers | | 442 | | | 87 | | | | 529 | |
Alternative revenue and other | Alternative revenue and other | | 6.0 | | | 1.2 | | | — | | | 7.2 | | Alternative revenue and other | | 6 | | | 1 | | | | 7 | |
Total revenues | Total revenues | | $ | 422.9 | | | $ | 82.0 | | | $ | 0.2 | | | $ | 505.1 | | Total revenues | | $ | 448 | | | $ | 88 | | | | $ | 536 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2020 |
(Millions of Dollars) | | Electric | | Natural Gas | | | | Total |
Major revenue types | | | | | | | | |
Revenue from contracts with customers: | | | | | | | | |
Residential | | $ | 125 | | | $ | 35 | | | | | $ | 160 | |
C&I | | 194 | | | 26 | | | | | 220 | |
Other | | 3 | | | 0 | | | | | 3 | |
Total retail | | 322 | | | 61 | | | | | 383 | |
Interchange | | 82 | | | 0 | | | | | 82 | |
Other | | 1 | | | 2 | | | | | 3 | |
Total revenue from contracts with customers | | 405 | | | 63 | | | | | 468 | |
Alternative revenue and other | | 6 | | | 1 | | | | | 7 | |
Total revenues | | $ | 411 | | | $ | 64 | | | | | $ | 475 | |
Note 7 to the consolidated financial statements included in NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 20192020 represents, in all material respects, the current status of other income tax matters except to the extent noted below, and are incorporated herein by reference. The following table reconciles the difference
Difference between the statutory rate and the ETR:
| | | Six Months Ended June 30 | | | Six Months Ended June 30 |
| | 2020 | | 2019 | | 2021 | | 2020 (a) |
Federal statutory rate | Federal statutory rate | | 21.0 | % | | 21.0 | % | Federal statutory rate | | 21.0 | % | | 21.0 | % |
State tax (net of federal tax effect) | State tax (net of federal tax effect) | | 6.2 | | | 6.2 | | State tax (net of federal tax effect) | | 6.2 | | | 6.2 | |
Increases (decreases) in tax from: | Increases (decreases) in tax from: | | Increases (decreases) in tax from: | |
Plant regulatory differences (a)(b) | Plant regulatory differences (a)(b) | | (18.4) | | | (0.5) | | Plant regulatory differences (a)(b) | | (5.4) | | | (18.4) | |
Nonplant ADIT amortization | | (12.5) | | | — | | |
Amortization of excess nonplant deferred taxes | | Amortization of excess nonplant deferred taxes | | 0 | | | (12.5) | |
Tax credits, net of NOL & tax credit allowances | Tax credits, net of NOL & tax credit allowances | | (1.7) | | | (1.0) | | Tax credits, net of NOL & tax credit allowances | | (1.3) | | | (1.7) | |
Prior period adjustments | | — | | | 2.2 | | |
Other (net) | Other (net) | | 0.8 | | | 0.3 | | Other (net) | | 0.2 | | | 0.9 | |
Effective income tax rate | Effective income tax rate | | (4.6) | % | | 28.2 | % | Effective income tax rate | | 20.7 | % | | (4.5) | % |
(a) Prior periods have been restated to conform to current year presentation.
(b) Regulatory differences for income tax primarily relatesrelate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.
Federal Audits — NSP-Wisconsin is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s consolidated federal income tax returns expire as follows:
| | | | | | | | |
Tax Years | | Expiration |
20092014 - 20132016 | | January 2022 |
2017 | | September 2020 |
2014 - 2016 | | June 2021 |
In 2017,Additionally, the IRS concluded the auditstatute of limitations related to a federal tax years 2012 and 2013 and proposed an adjustment that would impact Xcel Energy’s NOL and ETR.loss carryback claim filed in 2020 has been extended. Xcel Energy filedhas recognized its best estimate of income tax expense that will result from a protest withfinal resolution of this issue; however, the IRS. In April 2020, Xcel Energyoutcome and Appeals reached an agreement and no material adjustments were required.
In 2018, the IRS began an audittiming of tax years 2014-2016. As of June 30, 2020, 0 adjustments have been proposed.a resolution is unknown.
State Audits — NSP-Wisconsin is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of June 30, 2020,2021, NSP-Wisconsin’s earliest open tax year subject to examination by state taxing authorities under applicable statutes of limitations is 2014.2016. In 2018,March 2021, Wisconsin began an audit of tax years 2014-2016. As of June 30, 2020, 02016 - 2019. No material adjustments have been proposed.
Unrecognized Benefits — Unrecognized The unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the annual ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.timing. A change in the periodtiming of deductibility would not affect the ETR but would accelerate the payment to the taxing authority to an earlier period.authority.
Unrecognized tax benefits — permanent vs. temporary:
| (Millions of Dollars) | (Millions of Dollars) | | June 30, 2020 | | Dec. 31, 2019 | (Millions of Dollars) | | June 30, 2021 | | Dec. 31, 2020 |
Unrecognized tax benefit — Permanent tax positions | Unrecognized tax benefit — Permanent tax positions | | $ | 2.6 | | | $ | 2.6 | | Unrecognized tax benefit — Permanent tax positions | | $ | 2 | | | $ | 1 | |
Unrecognized tax benefit — Temporary tax positions | Unrecognized tax benefit — Temporary tax positions | | 0.8 | | | 0.8 | | Unrecognized tax benefit — Temporary tax positions | | 1 | | | 1 | |
Total unrecognized tax benefit | Total unrecognized tax benefit | | $ | 3.4 | | | $ | 3.4 | | Total unrecognized tax benefit | | $ | 3 | | | $ | 2 | |
Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
| | | | | | | | | | | | | | |
(Millions of Dollars) | | June 30, 2020 | | Dec. 31, 2019 |
NOL and tax credit carryforwards | | $ | (2.1) | | | $ | (2.2) | |
Net deferred tax liability associated with the unrecognized tax benefit amounts and related NOLs and tax credits carryforwards were $1.3 million at June 30, 2020 and $1.2 million at Dec. 31, 2019. | | | | | | | | | | | | | | |
(Millions of Dollars) | | June 30, 2021 | | Dec. 31, 2020 |
NOL and tax credit carryforwards | | $ | (2) | | | $ | (2) | |
As the IRS audits resume and state audits progress,audit progresses, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $1.8$1 million in the next 12 months.
Payables for interest related to unrecognized tax benefits were not material and 0 amounts were accrued for penalties related to unrecognized tax benefits as of June 30, 2020 and2021 or Dec. 31, 2019, respectively.
2020.
| | |
7. Fair Value of Financial Assets and Liabilities |
Fair Value Measurements
Accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance.
•Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices;prices.
•Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs; andinputs.
•Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation.
Specific valuation methods include:
Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted net asset value.
Interest rate derivatives — The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.
Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2 classification.
When contractual settlements relate to inactive delivery locations or extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of forward prices and volatilitiesinputs on a valuation is evaluated and may result in Level 3 classification.
Derivative Instruments Fair Value Measurements
NSP-Wisconsin enters into derivative instruments, including forward contracts, futures, swaps and options, for trading purposes and to manage risk in connection with changes in interest rates and utility commodity prices.
Interest Rate Derivatives — NSP-Wisconsin may enter into various instruments that effectively fix the yield or price on a specified benchmark interest rate for an anticipated debt issuance for a specific period. These derivative instruments are generally designated as cash flow hedges for accounting purposes. As of June 30, 20202021 and Dec. 31, 2019,2020, there were 0 interest rate derivatives designated as cash flow hedges.
Commodity Derivatives — NSP-Wisconsin may enter into derivative instruments to manage variability of future cash flows from changes in commodity prices in its electric and natural gas operations, as well as for trading purposes. This could include the purchase or sale of natural gas to generate electric energy and natural gas for resale.
Gross notional amounts of commodity options:
| | | | | | | | | | | | | | |
(Amounts in Millions) (a)(b) | | June 30, 2020 | | Dec. 31, 2019 |
Million British thermal units of natural gas | | 0.4 | | | 0.1 | |
(a)Amounts are not reflective of net positions in the underlying commodities.
(b)Notional amounts for options are included on a gross basis, but are weighted for the probability of exercise.
Consideration of Credit Risk and Concentrations — NSP-Wisconsin continuously monitors the creditworthiness of counterparties to its interest rate derivatives and commodity derivative contracts prior to settlement, and assesses each counterparty’s ability to perform on the transactions set forth in the contracts. Impact of credit risk was immaterial to the fair value of unsettled commodity derivatives presented inon the consolidated balance sheets.
Impact of Derivative Activities on Income and Accumulated Other Comprehensive Loss — Changes in the fair value of natural gas commodity derivatives resulted in $0.1 million net0 gains or losses and immaterial net$1 million in losses for the three and six months ended June 30, 2020,2021, respectively, which were recognized as regulatory assets and liabilities. There were immaterial net losses for the three and six months ended June 30, 2019, respectively, which were recognized as regulatory assets and liabilities.2020. The classification as a regulatory asset or liability is based on commission approved regulatory recovery mechanisms.
During both the three months ended June 30, 20202021 and 2019,2020, there were 0 settlement gains or losses on natural gas commodity derivatives. During the six months ended June 30, 20202021 and 2019,2020, there were $0.9$1 million of net settlement losses, and $0.2 million of net settlement gains on natural gas commodity derivatives, respectively, which were recognized subject to purchased natural gas cost recovery mechanisms, which result in reclassifications of derivative settlement gains and losses out of income to a regulatory asset or liability, as appropriate.
NSP-Wisconsin had 0 derivative instruments designated as fair value hedges during the three and six months ended June 30, 20202021 and 2019,2020, respectively.
Recurring Fair Value Measurements — As of June 30, 2021, there were immaterial derivative assets measured at fair value on a recurring basis. At Dec. 31, 2020, NSP-Wisconsin's derivative assets measured at fair value on a recurring basis were as follows:
| | | June 30, 2020 | | | Dec. 31, 2020 |
| | Fair Value | | | Fair Value Total | | Netting (a) | | Total (b) | | Fair Value | | Fair Value Total | | Netting (a) | | Total (b) |
(Millions of Dollars) | (Millions of Dollars) | | Level 1 | | Level 2 | | Level 3 | | | | | | | Total (b) | | Level 1 | | Level 2 | | Level 3 | | Fair Value Total | Netting (a) | Total (b) |
Current derivative assets | Current derivative assets | | | | | | | | | | | | | Current derivative assets | | | | | | | | | | |
Natural gas commodity | Natural gas commodity | | $ | — | | | $ | 0.2 | | | $ | — | | | $ | 0.2 | | | $ | — | | | $ | 0.2 | | Natural gas commodity | | $ | 0 | | | $ | 1 | | | $ | 0 | | | $ | 1 | | | $ | 0 | | | $ | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec. 31, 2019 | | | | | | | | | | |
| | Fair Value | | | | | | Fair Value Total | | Netting (a) | | Total (b) |
(Millions of Dollars) | | Level 1 | | Level 2 | | Level 3 | | | | | | |
Current derivative assets | | | | | | | | | | | | |
Natural gas commodity | | $ | — | | | $ | 0.5 | | | $ | — | | | $ | 0.5 | | | $ | — | | | $ | 0.5 | |
(a) NSP-Wisconsin nets derivative instruments and related collateral inon its consolidated balance sheetsheets when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at June 30, 2020 and Dec. 31, 2019.2020. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.
(b) Included in prepayments and other current assets balance of $4.9 million at June 30, 2020 and $4.6$7 million at Dec. 31, 2019 in2020 on the consolidated balance sheets.
Fair Value of Long-Term Debt
Other financial instruments for which the carrying amount did not equal fair value:
| | | June 30, 2020 | | | Dec. 31, 2019 | | | June 30, 2021 | | Dec. 31, 2020 |
(Millions of Dollars) | (Millions of Dollars) | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | (Millions of Dollars) | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
Long-term debt, including current portion | Long-term debt, including current portion | | $ | 906.0 | | | $ | 1,124.3 | | | $ | 808.0 | | | $ | 924.3 | | Long-term debt, including current portion | | $ | 907 | | | $ | 1,067 | | | $ | 906 | | | $ | 1,124 | |
Fair value of NSP-Wisconsin’s long-term debt is estimated based on recent trades and observable spreads from benchmark interest rates for similar securities. Fair value estimates are based on information available to management as of June 30, 20202021 and Dec. 31, 2019,2020 and given the observability of the inputs, fair values presented for long-term debt were assigned as Level 2.
| | | | | | | | | | | | | | |
8. Benefit Plans and Other Postretirement Benefits | | | | |
Components of Net Periodic Benefit Cost (Credit)
| | | Three Months Ended June 30 | | | Three Months Ended June 30 |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | |
(Millions of Dollars) | (Millions of Dollars) | | Pension Benefits | | | Postretirement Health Care Benefits | | (Millions of Dollars) | | Pension Benefits | |
Service cost | Service cost | | $ | 1.2 | | | $ | 1.1 | | | $ | — | | | $ | — | | Service cost | | $ | 1 | | | $ | 1 | | |
Interest cost (a) | Interest cost (a) | | 1.2 | | | 1.4 | | | 0.1 | | | 0.1 | | Interest cost (a) | | 1 | | | 1 | | |
Expected return on plan assets (a) | Expected return on plan assets (a) | | (2.1) | | | (2.0) | | | — | | | — | | Expected return on plan assets (a) | | (2) | | | (2) | | |
| Amortization of prior service credit (a) | | — | | | — | | | (0.1) | | | (0.1) | | |
Amortization of net loss (a) | Amortization of net loss (a) | | 1.2 | | | 1.1 | | | 0.1 | | | 0.1 | | Amortization of net loss (a) | | 1 | | | 1 | | |
| Net periodic benefit cost | Net periodic benefit cost | | $ | 1.5 | | | $ | 1.6 | | | $ | 0.1 | | | $ | 0.1 | | Net periodic benefit cost | | $ | 1 | | | $ | 1 | | |
Costs not recognized due to effects of regulation | | 1.8 | | | — | | | — | | | — | | |
Effects of regulation | | Effects of regulation | | 0 | | | 2 | | |
Net benefit cost recognized for financial reporting | Net benefit cost recognized for financial reporting | | $ | 3.3 | | | $ | 1.6 | | | $ | 0.1 | | | $ | 0.1 | | Net benefit cost recognized for financial reporting | | $ | 1 | | | $ | 3 | | |
| | | Six Months Ended June 30 | | | Six Months Ended June 30 |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | |
(Millions of Dollars) | (Millions of Dollars) | | Pension Benefits | | | Postretirement Health Care Benefits | | (Millions of Dollars) | | Pension Benefits | |
Service cost | Service cost | | $ | 2.3 | | | $ | 2.2 | | | $ | — | | | $ | — | | Service cost | | $ | 3 | | | $ | 2 | | |
Interest cost (a) | Interest cost (a) | | 2.4 | | | 2.9 | | | 0.2 | | | 0.3 | | Interest cost (a) | | 2 | | | 2 | | |
Expected return on plan assets (a) | Expected return on plan assets (a) | | (4.2) | | | (4.2) | | | — | | | — | | Expected return on plan assets (a) | | (4) | | | (4) | | |
| Amortization of prior service credit (a) | | — | | | — | | | (0.1) | | | (0.2) | | |
Amortization of net loss (a) | Amortization of net loss (a) | | 2.4 | | | 2.2 | | | 0.1 | | | 0.1 | | Amortization of net loss (a) | | 2 | | | 3 | | |
| Net periodic benefit cost | Net periodic benefit cost | | $ | 2.9 | | | $ | 3.1 | | | $ | 0.2 | | | $ | 0.2 | | Net periodic benefit cost | | $ | 3 | | | $ | 3 | | |
Costs not recognized due to effects of regulation | | 3.7 | | | 0.2 | | | — | | | — | | |
Effects of regulation | | Effects of regulation | | 0 | | | 4 | | |
Net benefit cost recognized for financial reporting | Net benefit cost recognized for financial reporting | | $ | 6.6 | | | $ | 3.3 | | | $ | 0.2 | | | $ | 0.2 | | Net benefit cost recognized for financial reporting | | $ | 3 | | | $ | 7 | | |
(a) The components of net periodic cost other than the service cost component are included in the line item “other“Other expense, net” in the consolidated statementstatements of income or capitalized on the consolidated balance sheetsheets as a regulatory asset.
In January 2020,2021, contributions of $150.0$125 million were made across 4 of Xcel Energy’s pension plans, of which $6.7$5 million was attributable to NSP-Wisconsin. Xcel Energy does not expect additional pension contributions during 2020.
| | | | | | | | | | | | | | |
9. Commitments and Contingencies | | | | |
The following includes commitments, contingencies and unresolved contingencies that are material to NSP-Wisconsin’s financial position.
Legal
NSP-Wisconsin is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.
In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on NSP-Wisconsin’s consolidated financial statements. Unless otherwise required by GAAP, legalLegal fees are generally expensed as incurred.
Gas Trading Litigation — e prime is a wholly owned subsidiary of Xcel Energy. e prime was in the business of natural gas trading and marketing but has not engaged in natural gas trading or marketing activities since 2003. Multiple lawsuits involving multiple plaintiffs seeking monetary damages were commenced against e prime and its affiliates, including Xcel Energy, between 2003 and 2009 alleging fraud and anticompetitive activities in conspiring to restrain the trade of natural gas and manipulate natural gas prices. Cases were all consolidated in the U.S. District Court in Nevada.
NaNTwo cases remain active which include an MDL matter consisting of a Colorado purported class (Breckenridge) and a Wisconsin purported class (Arandell Corp.).
Breckenridge/Colorado — In February 2019, the MDL panel remanded Breckenridge back to the U.S. District Court in Colorado.Colorado. Settlement of approximately $3 million was reached in February 2021. The parties have sought and are awaiting court approval of the settlement. A hearing was held on July 22, 2021. A decision is anticipated in Q3.
Arandell Corp.— In February 2019,The trial has been vacated and will be rescheduled after the case was remanded back tocourt rules on the U.S. District Court in Wisconsin. Plaintiffs are seekingpending motions for reconsideration and for class certification. It is uncertain when the court will rule on this issue.
Xcel Energy has concluded that a loss is remote for boththe remaining lawsuits.lawsuit.
Rate Matters
MISO ROE Complaints —In— In November 2013 and February 2015, customerscustomer groups filed two ROE complaints against MISO TOs, includingwhich includes NSP-Minnesota and NSP-Wisconsin.
The first complaint argued forrequested a reduction in the base ROE in MISO transmission formula rates from 12.38% to 9.15%, for the time period of Nov. 12, 2013 to Feb. 11, 2015, and removal of ROE adders (including those for RTO membership). The second complaint sought to reducerequested, for a subsequent time period, a base ROE reduction from 12.38% to 8.67%.
In September 2016, the FERC issued an order (Opinion No. 551) granting a 10.32% base ROE (10.82% with the RTO adder) effective for the first complaint period of Nov. 12, 2013 to Feb. 11, 2015 and subsequent to the date of the order. The United States Court of Appeals for the District of ColumbiaD.C Circuit subsequently vacated and remanded FERC Opinion No. 531, which had established the ROE methodology on which the September 2016 FERC order was based.551.
In November 2019, the FERC issued an order adopting a new ROE methodology and settling(Opinion No. 569), which set the MISO base ROE at 9.88% (10.38% with the RTO adder), effective Sept. 28, 2016 and for the Nov. 12, 2013 to Feb. 11, 2015 refundfirst complaint period. The FERC also dismissed the second complaint. In December 2019, MISO TOs filed a request for rehearing.rehearing regarding the new ROE methodology announced in Opinion No. 569. Customers also filed requests for rehearing claiming, among other points, that the FERC erred by dismissing the second complaint without refunds.
In March 2020, the FERC issued a Notice of Proposed Rulemaking regarding changes to its policies for transmission incentives, including a proposal to increase the RTO participation adder from 50 to 100 basis points and to make the adder available regardless of whether a utility’s ongoing participation in the RTO is voluntary or required by legislation or a regulator.
In May 2020, the FERC issued Opinionan order (Opinion No. 569-A,569-A) which granted rehearing in part to Opinion 569 and further refined the FERC’s ROE methodology, most significantly to incorporate the risk premium model (in addition to the discounted cash flow and capital asset pricing models), resulting in a new base ROE of 10.02%, effective Sept. 28, 2016 and for the refund period in the first complaint.complaint period. The FERC also affirmed its decision in Opinion No. 569 to dismiss the second complaint.
Although
In November 2020, the May 2020 Order remains subjectFERC issued an order (Opinion No. 569-B) in response to pending requestsrehearing requests. The FERC corrected certain inputs to its ROE calculation model, did not change the ROE effective Sept. 28, 2016, and for rehearing, as well as the pending judicial review,first MISO complaint period and upheld its decision to deny refunds for the second complaint period. NSP-Minnesota has recognized a liability has been recognized for theits best estimate of final refunds to customers. Each 10 basis point reduction in ROE for the first complaint period, second complaint period, and subsequent period relative to amounts accrued would reduce Xcel Energy’s net income by $1 million, $1 million, and $2 million, respectively.
The MISO TOs and various parties have filed petitions for review of Opinion Nos. 569, 569-A and 569-B at the D.C. Circuit with initial briefs filed in March 2021 and final briefs expected in August 2021.
FERC NOPR on ROE Incentive Adders — In April 2021, the FERC issued a NOPR proposing to limit collection of ROE incentive adders for RTO membership to the first three years after an entity begins participation in an RTO. If adopted as a final rule, following a comment period expected to be complete by the end of 2021 or 2022, NSP-Wisconsin would prospectively discontinue charging their current 0.5% ROE incentive adders. Amounts related to a discontinuance of the adder would ultimately be offset by an increase in retail rates, following future rate cases.
Environmental
MGP, Landfill and Disposal Sites
Ashland MGP Site — NSP-Wisconsin was named a responsible party for contamination at the Ashland/Northern States Power Lakefront Superfund Site (the Site) in Ashland, Wisconsin. Remediation was completed in 2019 and restoration activities were completed in 2020. Groundwater treatment activities will continue for many years.
The cost estimate for remediation and restoration of the entire site is approximately $199.1 million. At June 30, 2020 and Dec. 31, 2019, NSP-Wisconsin had a total liability of $21.4 million and $23.2 million, respectively, for the entire site.
NSP-Wisconsin has deferred the unrecovered portion of the estimated Site remediation and restoration costs as a regulatory asset. The PSCW has authorized NSP-Wisconsin rate recovery for all remediation and restoration costs incurred at the Site and application of a 3% carrying charge to the regulatory asset.
In addition to the Ashland Site, NSP-Wisconsin is currently investigating, remediating or performing post-closure actions at 2 other MGP, landfill or other disposal sites across its service territories.
NSP-Wisconsin has recognized its best estimate of costs/liabilities that will result from final resolution of these issues, however, the outcome and timing is unknown. In addition, there may be insurance recovery and/or recovery from other potentially responsible parties, offsetting a portion of costs incurred.
NSP-Wisconsin evaluates performance based on profit or loss generated from the product or service provided. These segments are managed separately because the revenue streams are dependent upon regulated rate recovery, which is separately determined for each segment.
NSP-Wisconsin has the following reportable segments:
•Regulated Electric — The regulated electric utility segment generates electricity, which is transmitted and distributed in Wisconsin and Michigan; andMichigan.
•Regulated Natural Gas — The regulated natural gas utility segment purchases, transports, stores and distributes natural gas in portions of Wisconsin and Michigan.
NSP-Wisconsin presents Other, which includes operating segments with revenues below the necessary quantitative thresholds. Those operating segments primarily include investments in rental housing projects that qualify for low-income housing tax credits.
Asset and capital expenditure information is not provided for NSP-Wisconsin's reportable segments. As an integrated electric and natural gas utility, NSP-Wisconsin operates significant assets that are not dedicated to a specific business segment. Reporting assets and capital expenditures by business segment would require arbitrary and potentially misleading allocations, which may not necessarily reflect the assets that would be required for the operation of the business segments on a stand-alone basis.
Certain costs, such as common depreciation, common O&M expenses and interest expense are allocated based on cost causation allocators across each segment. In addition, a general allocator is used for certain general and administrative expenses, including office supplies, rent, property insurance and general advertising.
NSP-Wisconsin's segment information for the three and six months ended June 30:information:
| | | | | | | | | | | | | | |
| | Three Months Ended June 30 | | |
(Millions of Dollars) | | 2020 | | 2019 |
Regulated Electric | | | | |
Operating revenues (a) | | $ | 199.3 | | | $ | 207.9 | |
Intersegment revenues | | 0.1 | | | 0.1 | |
Total operating revenue | | $ | 199.4 | | | $ | 208.0 | |
Net income | | 16.3 | | | 10.9 | |
Regulated Natural Gas | | | | |
Operating revenues | | $ | 19.0 | | | $ | 20.9 | |
Intersegment revenues | | 0.2 | | | — | |
Total operating revenue | | $ | 19.2 | | | $ | 20.9 | |
Net loss | | (2.9) | | | (1.3) | |
All Other | | | | |
Operating revenues | | $ | 0.2 | | | $ | 0.1 | |
| | | | |
| | | | |
Net loss | | (1.3) | | | (1.0) | |
Consolidated Total | | | | |
Operating revenues (a) | | $ | 218.8 | | | $ | 229.0 | |
Reconciling eliminations | | (0.3) | | | (0.1) | |
Total operating revenues | | $ | 218.5 | | | $ | 228.9 | |
Net income | | 12.1 | | | 8.6 | |
| | | | | | | | | | | | | | |
| | Three Months Ended June 30 |
(Millions of Dollars) | | 2021 | | 2020 |
Regulated Electric | | | | |
| | | | |
| | | | |
Total revenues (a) | | $ | 224 | | | $ | 199 | |
Net income | | 16 | | | 16 | |
Regulated Natural Gas | | | | |
| | | | |
| | | | |
Total revenues | | $ | 31 | | | $ | 19 | |
Net loss | | (2) | | | (3) | |
All Other | | | | |
Total revenues | | $ | 0 | | | $ | 0 | |
Net loss | | 0 | | | (1) | |
Consolidated Total | | | | |
Total revenues (a) | | $ | 255 | | | $ | 218 | |
| | | | |
| | | | |
Net income | | 14 | | | 12 | |
(a)OperatingTotal revenues include $41.5$46 million and $43.5$41 million of affiliate electric revenue for the three months ended June 30, 20202021 and 2019,2020, respectively.
| | | | | | | | | | | | | | |
| | Six Months Ended June 30 |
(Millions of Dollars) | | 2021 | | 2020 |
Regulated Electric | | | | |
| | | | |
| | | | |
Total revenues (a) | | $ | 448 | | | $ | 411 | |
Net income | | 40 | | | 41 | |
Regulated Natural Gas | | | | |
| | | | |
| | | | |
Total revenues | | $ | 88 | | | $ | 64 | |
Net income | | 6 | | | 6 | |
All Other | | | | |
Total revenues | | $ | 0 | | | $ | 0 | |
Net loss | | 0 | | | (1) | |
Consolidated Total | | | | |
Total revenues (a) | | $ | 536 | | | $ | 475 | |
| | | | |
| | | | |
Net income | | 46 | | | 46 | |
| | | | | | | | | | | | | | |
| | Six Months Ended June 30 | | |
(Millions of Dollars) | | 2020 | | 2019 |
Regulated Electric | | | | |
Operating revenues (a) | | $ | 411.1 | | | $ | 422.9 | |
Intersegment revenues | | 0.2 | | | 0.2 | |
Total operating revenue | | $ | 411.3 | | | $ | 423.1 | |
Net income | | 41.0 | | | 24.1 | |
Regulated Natural Gas | | | | |
Operating revenues | | $ | 64.2 | | | $ | 82.0 | |
Intersegment revenues | | 0.3 | | | 0.2 | |
Total operating revenues | | $ | 64.5 | | | $ | 82.2 | |
Net income | | 6.0 | | | 9.2 | |
All Other | | | | |
Operating revenues | | $ | 0.2 | | | $ | 0.2 | |
| | | | |
| | | | |
Net loss | | (1.3) | | | (0.7) | |
Consolidated Total | | | | |
Operating revenues (a) | | $ | 476.0 | | | $ | 505.5 | |
Reconciling eliminations | | (0.5) | | | (0.4) | |
Total operating revenues | | $ | 475.5 | | | $ | 505.1 | |
Net income | | 45.7 | | | 32.6 | |
(a)OperatingTotal revenues include $82.4$92 million and $87.6$82 million of affiliate electric revenue for the six months ended June 30, 2021 and 2020, and 2019, respectively.
| | | | | | | | | | | | | | |
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | | | |
Discussion of financial condition and liquidity for NSP-Wisconsin is omitted per conditions set forth in general instructionsGeneral Instructions H(1)(a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis of the results of operations set forth in general instructionsGeneral Instruction H(2)(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).
Non-GAAP Financial Measures
The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as electric margin and natural gas margin, and ongoing earnings.margin. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from measures calculated and presented in accordance with GAAP.
NSP-Wisconsin’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.
Electric and Natural Gas Margins
Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.
Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, O&M expenses, conservation, depreciation and amortization and taxes (other than income taxes).
NSP-Wisconsin’s year-to-date net income was approximately $45.7flat compared with the same period in 2020 ($46 million for both the six months ended June 30, 2020 compared with approximately $32.6 million for the prior year. The increase was driven by lower O&M2021 and income taxes, as well as higher electric margin (due primarily to regulatory outcomes which offset lower sales from COVID-19), partially offset by lower natural gas margins due to unfavorable weather and increased depreciation.2020).
Electric Margin
Electric production expenses tend to vary with the quantity of electricity sold and changes in the unit costs of fuel and purchased power. The electric fuel and purchased power cost recovery mechanism of the Wisconsin jurisdiction may not allow for complete recovery of all expenses and, therefore, changes in fuel or purchased power costs can impact earnings.
Electric revenues and margin:
| | | Six Months Ended June 30 | | | Six Months Ended June 30 |
(Millions of Dollars) | (Millions of Dollars) | | 2020 | | 2019 | (Millions of Dollars) | | 2021 | | 2020 |
Electric revenues | Electric revenues | | $ | 411.1 | | | $ | 422.9 | | Electric revenues | | $ | 448 | | | $ | 411 | |
Electric fuel and purchased power | Electric fuel and purchased power | | (191.9) | | | (208.4) | | Electric fuel and purchased power | | (216) | | | (192) | |
Electric margin | Electric margin | | $ | 219.2 | | | $ | 214.5 | | Electric margin | | $ | 232 | | | $ | 219 | |
Changes in electric margin:
| | | | | | | | | | | | | | |
(Millions of Dollars) | | 2020Six Months Ended June 30, 2021 vs. 20192020 | | |
Regulatory rate outcomes | | $ | 14.012 | |
Estimated impact of weather | | 4 | |
Sales and demand (a) | | 4 | |
| | |
Interchange agreement billings with NSP-Minnesota | | 4.2 (6) | | | |
Sales and demand (a)
| | (6.9) | | | |
Purchased capacity costs | | (6.8) | | | |
Estimated impact of weather | | (1.0) | | | |
Other (net) | | 1.2 (1) | | | |
Total increase in electric margin | | $ | 4.713 | | | |
(a)Sales decline excludes weather impact.
Natural Gas Margin
Total natural gas expense varies with changing sales requirements and the cost of natural gas. However, fluctuations in the cost of natural gas hashave minimal impact on natural gas margin due to natural gas cost recovery mechanisms.
Natural gas revenues and margin:
| | | Six Months Ended June 30 | | | Six Months Ended June 30 |
(Millions of Dollars) | (Millions of Dollars) | | 2020 | | 2019 | (Millions of Dollars) | | 2021 | | 2020 |
Natural gas revenues | Natural gas revenues | | $ | 64.2 | | | $ | 82.0 | | Natural gas revenues | | $ | 88 | | | $ | 64 | |
Cost of natural gas sold and transported | Cost of natural gas sold and transported | | (28.0) | | | (40.5) | | Cost of natural gas sold and transported | | (51) | | | (28) | |
Natural gas margin | Natural gas margin | | $ | 36.2 | | | $ | 41.5 | | Natural gas margin | | $ | 37 | | | $ | 36 | |
Changes in natural gas margin:
| | | | | | | | |
(Millions of Dollars) | | 2020Six Months Ended June 30, 2021 vs. 20192020 |
Estimated impact of weather | | $ | (4.1) | |
Regulatory rate outcomes (Wisconsin) | | (1.6) | |
Sales growth | | 1.01 | |
Other (net) | | (0.6) | |
Total decreaseincrease in natural gas margin | | $ | (5.3)1 | |
Non-Fuel Operating Expenses and Other Items
O&M Expenses— O&M expenses decreased $9.7 million, or 9.4%, for the six months ended June 30, 2020 compared with the prior year. The decrease was primarily due to cost mitigation efforts to offset the negative impacts of COVID-19 including allocation of workforce, material and supply management, performance of maintenance, as well as, interchange billings with NSP-Minnesota and employee healthcare expenses.
Depreciation and Amortization — Depreciation and amortization expense increased $8.9decreased $4 million, or 13.0%5.2%, for the six months ended June 30, 2020 compared with the prior year.year-to-date. The increase was primarilydecrease is due to increased MGPlower amortization and electric distribution plant additionsof environmental regulatory assets, partially offset by normal system expansion and deferred tax liability amortization.
IncomeIncome Taxes — Income tax expense decreased $14.8increased $14 million for the first six months ended June 30, 2020 compared with the prior year.of 2021. The decreaseincrease was primarily driven by an increasea decrease in plant regulatory differences, lower non-plant accumulated deferred income tax amortization and nonplant ADIT amortization. The ETR was (4.6%) for the six months ended June 30, 2020 compared with 28.2% for the same periodhigher pretax earnings in 2019, largely due to the items referenced above.2021.
See Note 6 to the consolidated financial statements for further information.
Winter Storm Uri
In February 2021, the central portion of the United States experienced a major winter storm (Winter Storm Uri). Extreme cold temperatures impacted certain operational assets as well as the availability of renewable generation across the region. The cold weather also affected the country’s supply and demand for natural gas. These factors contributed to extremely high market prices for natural gas and electricity.
As a result of the extremely high market prices, NSP-Wisconsin incurred net natural gas, fuel and purchased energy costs of approximately $45 million (largely deferred as regulatory assets) in the first quarter. Certain energy transactions are subject to final/settlement calculation adjustments, including the impacts of credit losses shared among market participants. Such adjustments are not expected to be material to our results of operations, financial condition or cash flows.
Regulatory Overview — NSP-Wisconsin has natural gas, fuel and purchased energy mechanisms in each jurisdiction for recovering incurred costs. However, February cost increases were deferred for future recovery with recovery proposed over a period of up to ten months to mitigate the impact to customer bills. Additionally, NSP-Wisconsin is not requesting recovery of financing costs in order to further limit the impact to our customers.
Proceedings initiated:
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Jurisdiction | Regulatory Status |
Wisconsin | In March, the PSCW approved NSP-Wisconsin's proposal to recover $45 million of natural gas costs incurred during Storm Uri over nine months through December 2021 with no financing charge. |
Michigan | In May, the Michigan Public Service Commission approved recovery of $2 million in natural gas costs over 10 months with no financing charge. |
Supply Chain and Capital Expenditures
NSP-Wisconsin’s ability to meet customer energy requirements, respond to storm-related disruptions and execute our capital expenditure program are dependent on maintaining an efficient supply chain. Overall, as a result of COVID-19, manufacturing processes have experienced disruptions related to scarcity of raw materials and interruptions in production and shipping. These disruptions have been further exacerbated by inflationary pressures, storms and labor shortages. The Company continues to monitor the availability of materials and seek alternative suppliers as necessary.
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Public Utility Regulation | | | | |
The FERC and various state and local regulatory commissions regulate NSP-Wisconsin. The electric and natural gas rates charged to customers of NSP-Wisconsin are approved by the FERC or the regulatory commissions in the states in which it operates.
The ratesRates are designed to recover plant investment, operating costs and an allowed return on investment. NSP-Wisconsin requests changes in utility rates for utility services through filings with governing commissions.commission filings.
Changes in operating costs can affect NSP-Wisconsin’s financial results, depending on the timing of rate case filings and implementation of final rates. Other factors affecting rate filings are new investments, sales, conservation and demand side management efforts, and the cost of capital. In addition, the regulatory commissions authorize the ROE, capital structure and depreciation rates in rate proceedings. Decisions by these regulators can significantly impact NSP-Wisconsin’s results of operations.
Except to the extent noted below, the circumstances set forth in Public Utility Regulation included in Item 7 of NSP-Wisconsin’s Annual Report on Form 10-K10-K for the year ended Dec. 31, 20192020 and in Item 2 of NSP-Wisconsin’sNSP-Wisconsin's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 20202021 appropriately represent, in all material respects, the current status of public utility regulation and are incorporated herein by reference. NSP-Wisconsin Solar Proposal —In June 2021, the PSCW approved NSP-Wisconsin’s request to purchase the 74 MW Western Mustang build-own-transfer solar facility for approximately $100 million. The project is scheduled to go into service in 2023.
NSP-Wisconsin Electric and Natural Gas Settlement — In July 2021, NSP-Wisconsin filed an application with the PSCW seeking approval of a rate case settlement with various intervenors for 2022-2023.
The settlement agreement increases electric rates by $35 million (4.9%) for 2022 and an incremental $18 million increase (2.5%) for 2023. For the natural gas utility, rates increase by $10 million (8.4%) for 2022 and an incremental $3 million (2.3%) increase for 2023.
Key elements of the settlement include:
•ROE of 9.80% for 2022 and 10.00% for 2023.
•Equity ratio of 52.5% for both 2022 and 2023.
•Returning $9 million in various net regulatory liabilities to offset customer impacts in 2023.
2019 Electric Fuel Cost Recovery •—Deferring certain pension and other post-employment benefit expense in 2021 through 2023.
•Addressing COVID-19 deferral recovery in the next rate case proceeding.
•NSP-Wisconsin’s electric fuel costs for 2019 were lower than authorizedDeferring potential changes in rates and outside the 2% annual tolerance band, primarilytax expenses due to increased sales to other utilities compared to the forecast used to set authorized rates. Under the fuel cost recovery rules, NSP-Wisconsin may retain approximately $3.4 million of fuel costs and defer the amount of over-recoverychanges in excess of the 2% annual tolerance band for future refund to customers. In March 2020, NSP-Wisconsin filed with the PSCW indicating over-collections of approximately $9.7 million to customers and proposed for refunds to be issuedfederal or state tax law in September 2020.2021 through 2023.
2021 Electric Fuel Cost Recovery •—In June 2020, NSP-Wisconsin filedIncorporating an application with the PSCW to update its 2021 fuel costsearnings sharing mechanism for 2022 and return biomass fuel savings, which would decrease retail electric rates for 2021 by approximately $13.9 million. The PSCW will decide on the application later in 2020.2023.
Request to Participate in UMP— In June 2020, NSP-Wisconsin withdrew its request to temporarily participateA PSCW decision is anticipated in the UMP originally filed in April 2020 due to the public health emergency. Instead, NSP-Wisconsin submitted its formal application to the PSCW to permanently participate in the UMP in July 2020. NSP-Wisconsin expects a Commission decision later in 2020. fourth quarter of 2021.
Environmental RegulationAffordable Clean Energy
In July 2019, the EPA adopted the Affordable Clean Energy rule, which requires states to develop plans by 2022 for greenhouse gas reductions from coal-fired power plants. The state plans, due toIn January 2021, the U.S. Court of Appeals for the D.C. Circuit issued a decision vacating and remanding the Affordable Clean Energy rule. That decision, if not successfully appealed or reconsidered, would allow the EPA in July 2022, will evaluate and potentiallyto proceed with alternate regulation of coal-fired power plants. If the new rules require heat rate improvements at existing coal-fired plants. It is not yet known how these state plans will affect our existing coal plants, but they could require substantial additional investment, even in plants slated for retirement. NSP-Wisconsin believes, based on prior state commission practice,practices, that the cost of these initiatives or replacement generation would be recoverable through rates.
Emerging Regulation
New regulations and legislation are being considered to regulate PFAS in drinking water, water discharges, commercial products, wastes, and other areas. PFAS are man-made chemicals found in many consumer products that can persist and accumulate in the environment. These chemicals have received heightened attention by environmental regulators. Increased regulation of PFAS and other emerging contaminants at the federal, state, and local level could have a potential adverse effect on our operations but at this time, it is uncertain what impact, if any, there will be on our results of operations, financial condition or cash flows. NSP-Wisconsin will continue to monitor these regulatory developments and their potential impact on its operations
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ITEM 4 — CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
NSP-Wisconsin maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.
In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.
As of June 30, 2020,2021, based on an evaluation carried out under the supervision and with the participation of NSP-Wisconsin’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and the procedures, the CEO and CFO have concluded that NSP-Wisconsin’s disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
No changes in NSP-Wisconsin’s internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, NSP-Wisconsin’s internal control over financial reporting.
PART II — OTHER INFORMATION
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ITEM 1 — LEGAL PROCEEDINGS | | | | |
NSP-Wisconsin is involved in various litigation matters in the ordinary course of business. The assessment of whether a loss is probable or is a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Management maintains accruals for losses probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of a reasonably possible loss in certain situations, including but not limited to, when (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories.
In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss. For current proceedings not specifically reported herein, management does not anticipate that the ultimate liabilities, if any, would have a material effect on NSP-Wisconsin’s consolidated financial statements. Unless otherwise required by GAAP, legalLegal fees are generally expensed as incurred.
See Note 9 to the consolidated financial statements and Part I Item 2 for further information.
There have been no material changes from the risk factors disclosed in our Form 10-K for the year ended Dec. 31, 2019 except as follows:We face risks related to health epidemics and other outbreaks, which may have a material effect on our financial condition, results of operations and cash flows.
The global outbreak of COVID-19 is currently impacting countries, communities, supply chains and markets. A high degree of uncertainty continues to exist regarding COVID-19, the duration and magnitude of business restrictions, re-shut downs, if any, and the level and pace of economic recovery. While we are implementing contingency plans, there are no guarantees these plans will be sufficient to offset the impact of COVID-19.
We cannot ultimately predict whether it will have a material impact on our liquidity, financial condition, or results of operations. Nor can we predict the impact of the virus on the health of our employees, our supply chain or our ability to recover higher costs associated with managing through the pandemic.
NSP-Wisconsin's risk factors are documented in Item 1A of Part I of its Annual Report on Form 10-K for the year ended Dec. 31, 2019,2020, which is incorporated herein by reference, as well as other information set forthreference. There have been no material changes from the risk factors previously disclosed in this report, which could have a material impact on our financial condition, results of operations and cash flows.the Form 10-K.
* Indicates incorporation by reference
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Exhibit Number | Description | Report or Registration Statement | SEC File or Registration Number | Exhibit Reference |
| | NSP-Wisconsin Form S-4 dated Jan. 21, 2004 | 333-112033 | 3.01 |
| | NSP-Wisconsin Form 10-K for the year ended Dec. 31, 2018 | 001-03140 | 3.02 |
| | NSP-Wisconsin 8-K dated May 26, 2020 | 001-03140 | 4.01 |
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101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | | |
101.SCH | Inline XBRL Schema | | | |
101.CAL | Inline XBRL Calculation | | | |
101.DEF | Inline XBRL Definition | | | |
101.LAB | Inline XBRL Label | | | |
101.PRE | Inline XBRL Presentation | | | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | Northern States Power Company (a Wisconsin corporation) |
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July 31, 202029, 2021 | By: | /s/ JEFFREY S. SAVAGE |
| | Jeffrey S. Savage |
| | Senior Vice President, Controller |
| | (Principal Accounting Officer) |
| | |
| | /s/ BRIAN J. VAN ABEL |
| | Brian J. Van Abel |
| | Executive Vice President, Chief Financial Officer and Director |
| | (Principal Financial Officer) |